The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

While the NHL continues to lockout its players, it has to focus on other matters as well, including a pending lawsuit concerning alleged anti-competitive agreements. (Photo credit: Wikipedia)

“This game is blacked out in your area.” The dreaded words every fan hates to read when looking at his professional sports team’s TV schedule. But now a group of baseball and hockey fans have taken action.

In March of this year, a number of fans filed a class action lawsuit against the National Hockey League (NHL); Major League Baseball (MLB); individual clubs; regional TV sports networks; Comcast Corp; and DirecTV. The class action suit alleges violations of U.S. antitrust laws by the named Defendants. Specifically, the group of fans is alleging that the Defendants have violated U.S antitrust law by entering into a series of agreements that eliminate, restrict, and prevent off-field competition.

The fans argue that the MLB and NHL have agreed to divide the live-game video presentation market into exclusive territories and protect these territories through anticompetitive blackouts. They further allege that these agreements are not necessary to produce professional contests, and that the agreements directly reduce competition in the live-game presentation market. The Complaint states that consumers can only watch video presentations of other teams through two exclusive “out of market” packages - those two packages being “MLB.TV” and “MLB EXTRA INNINGS” for baseball. The problem is that for both of these packages, the “in-market” game is blacked out in order to protect the local television partner. Therefore, the fan must subscribe to a cable package that includes the in-market game in order to watch his in-market team, regardless of the fact that he may have purchased the above-mentioned TV packages.

Antitrust restraints are necessary in certain situations in order to create/maintain a level of competitive balance within a league. However, those restraints must be reasonably necessary to maintain such a level. The Plaintiffs allege that these restraints are not reasonably necessary and that there exists “obvious well-recognized less restrictive alternatives.” The Defendants responded to this Class Action Complaint by filing a Motion to Dismiss.

On December 5, 2012, Judge Shira Scheindlin of the U.S. District Court denied the Defendants request to dismiss the lawsuit. In a written opinion, the Judge stated, "Plaintiffs have adequately alleged harm to competition with respect to the horizontal agreements among individual hockey and baseball clubs, as part of the NHL and MLB, to divide the television market. The consumers have plausibly alleged that they are the direct victims of this harm to competition."

The fact that Judge Scheindlin denied the motion to dismiss is not surprising. "At this point, the court is not looking at any factual analysis," explained Marc Edelman, Antitrust and Sports Law professor at Dwayne O. Andreas School of Law. However, the judge did dismiss claims that Comcast, DirecTV and the sports networks conspired to monopolize markets, while allowing similar claims against Major League Baseball and the NHL to proceed.

This decision by the Court does not mean that the group of fans have won this case, but it is still outstanding news for them. Now the Defendants will be under an immense amount of pressure to settle this case outside of the courtroom. The longer litigation ensues, the more fees build up for Defendants. Also, the Defendants will most likely not want a jury deciding just how much in money damages should be allocated to the Plaintiffs, especially if those jurors are sports fans.

"Ninety-percent or more of cases settle prior to trial," said Edelman. "In the context of antitrust, it is extremely rare that any case goes all the way to trial. It is also possible that these claims could be dismissed at a Motion for Summary Judgment stage after a court has a chance to review all of the evidence."

Benjamin Haynes, Esq. contributed to this article. Haynes is a former Division 1 Basketball Player at Oral Roberts University and currently practices law in the State of Florida. Follow him at @BHaynes32.